14 DAY TRIAL // ProMOS Technologies is a Taiwanese memory chip maker that started building a new memory production factory right in the middle of the worst case of DRAM price depreciation ever. The theory behind ProMOS Technologies' bold move was that once prices start to rise again, other producers would have little or no memory chips in their inventories and they would eventually lose market shares. Now, ProMOS' memory factory just got its second spending rise to $1.8 billion from the more modest first one of only $1.6 billion.
Computer memory prices are still very low, even if the market as a whole stopped sliding downhill. The most used and sought after memory chip today is the 512MB DDR2 chip (double data rate, second generation) that runs at 667MHz effective clock. The prices for these types of memory dropped 66 percent so far during this year to only $2.19 each, according to DRAMeXchange Technology, which runs an online trading site for the chips as was cited by InfoWorld. The problem is that the price is near or slightly below the manufacturing costs for most memory producers and very far from the $6.36 price the chips were valued to last year.
"Even though prices are falling, we still have to upgrade production lines to new technology in order to cut costs," said Jessie Peng, chief financial officer at ProMOS, in a telephone interview. A large portion of the spending is for a new plant the company expects to ramp up to maximum capacity by the end of this year. The company also hasn't changed any of its longer term spending plans. "We have to keep up with our rivals," she added. ProMOS is not the only memory producer in Taiwan to begin investments in new production lines, as Inotera Memories Inc and Powerchip Semiconductor in collaboration with Elpida Memories from Japan, also plan to design and build new production facilities to keep pace with memory giants like Samsung.